UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021

OR

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

AMMO, Inc.

(Exact Name of Registrant as Specified in its Charter)

delaware

001-13101

83-1950534

(State

of incorporation)

(Commission

File No.)

(I.R.S. Identification

Number)

7681 E Gray Road, Scottsdale, AZ 85260

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number including area code: (480) 947-0001

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

POWW

The Nasdaq Stock Market LLC (Nasdaq

Capital Market)

8.75% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value

POWWP

The Nasdaq Stock Market LLC (Nasdaq

Capital Market)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of February 11, 2022, there were 115,526,404 shares of $0.001 par value Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None.

TABLE OF CONTENTS

PART I

ITEM 1:	FINANCIAL STATEMENTS	3
	Condensed Consolidated Balance Sheets as of December 31, 2021 (Unaudited) and March 31, 2021	3
	Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended December 31, 2021, and 2020	4
	Condensed Consolidated Statement of Shareholders’ Equity (Unaudited) for the three and nine months ended December 31, 2021, and 2020	5
	Condensed Consolidated Statements of Cash flow (Unaudited) for the nine months ended December 31, 2021, and 2020	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
ITEM 2:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	25
ITEM 3:	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	33
ITEM 4:	CONTROLS AND PROCEDURES	33

PART II
ITEM 1:	LEGAL PROCEEDINGS	34
ITEM 1A:	RISK FACTORS	34
ITEM 2:	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34
ITEM 3:	DEFAULTS UPON SENIOR SECURITIES	34
ITEM 4:	MINE SAFETY DISCLOSURE	34
ITEM 5:	OTHER INFORMATION	35
ITEM 6:	EXHIBITS	35
SIGNATURES		36

PART I

ITEM 1. FINANCIAL STATEMENTS

AMMO, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2021			March 31, 2021
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	27,414,571		$	118,341,471
Accounts receivable, net		45,653,542			8,993,920
Due from related parties		15,657			15,657
Inventories		46,466,594			15,866,918
Prepaid expenses		3,923,778			2,402,366
Total Current Assets		123,474,142			145,620,332

Equipment, net		32,368,131			21,553,226

Other Assets:
Deposits		15,585,668			1,833,429
Licensing agreements, net		4,167			41,667
Patents, net		5,649,562			6,019,567
Other intangible assets, net		139,652,716			2,220,958
Goodwill		90,870,094			-
Right of use assets - operating leases		2,707,546			2,090,162
Deferred income tax asset		892,258			-
TOTAL ASSETS	$	411,204,284		$	179,379,341

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	24,425,343		$	4,371,974
Factoring liability		4,097,867			1,842,188
Accrued liabilities		5,114,768			3,462,785
Inventory credit facility		194,810			1,091,098
Current portion of operating lease liability		825,343			663,784
Current portion of note payable related party		669,463			625,147
Insurance premium note payable		285,718			41,517
Total Current Liabilities		35,613,312			12,098,493

Long-term Liabilities:
Contingent consideration payable		227,139			589,892
Notes payable related party, net of current portion		358,263			865,771
Note payable		-			4,000,000
Construction note payable, net of unamortized issuance costs		18,905			-
Operating lease liability, net of current portion		2,006,707			1,477,656
Deferred income tax liability		1,850,277			-
Total Liabilities		40,074,603			19,031,812

Shareholders’ Equity:
Series A Cumulative Perpetual Preferred Stock 8.75%, ($25.00 per share, $0.001 par value) 1,400,000 shares issued and outstanding as of December 31, 2021		1,400			-
Common stock, $0.001 par value, 200,000,000 shares authorized 115,436,404 and 93,099,067 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively		115,437			93,100
Additional paid-in capital		382,015,310			202,073,968
Accumulated deficit		(11,002,466	)		(41,819,539	)
Total Shareholders’ Equity		371,129,681			160,347,529
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	411,204,284		$	179,379,341

The accompanying notes are an integral part of these condensed consolidated financial statements.

AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2021			2020			2021			2020

Net Revenues
Ammunition sales	$	44,069,473		$	12,834,490		$	112,629,655		$	27,987,438
Marketplace revenue		17,596,769			-			46,646,051			-
Casing sales		3,022,944			3,785,754			10,891,897			10,305,648
Total Revenues		64,689,186			16,620,244			170,167,603			38,293,086

Cost of Revenues		42,166,320			13,278,338			102,457,775			32,590,149
Gross Profit		22,522,866			3,341,906			67,709,828			5,702,937

Operating Expenses
Selling and marketing		1,510,574			542,271			4,226,817			1,244,323
Corporate general and administrative		3,737,455			1,639,052			10,976,288			3,805,230
Employee salaries and related expenses		2,939,095			1,172,765			7,943,076			3,329,511
Depreciation and amortization expense		3,725,921			416,625			10,044,994			1,242,809
Loss on purchase		-			-			-			1,000,000
Total operating expenses		11,913,045			3,770,713			33,191,175			10,621,873
Income/(Loss) from Operations		10,609,821			(428,807	)		34,518,653			(4,918,936	)

Other Expenses
Other income		363			461,000			21,788			274,400
Interest expense		(190,319	)		(1,938,630	)		(468,404	)		(2,704,315	)
Total other expenses		(189,956	)		(1,477,630	)		(446,616	)		(2,429,915	)

Income/(Loss) before Income Taxes		10,419,865			(1,906,437	)		34,072,037			(7,348,851	)

Provision for Income Taxes		1,351,998			-			1,351,998			-

Net Income/(Loss)		9,067,867			(1,906,437	)		32,720,039			(7,348,851	)

Preferred Stock Dividend		(782,582	)		-			(1,902,966	)		-

Net Income/(Loss) Attributable to Common Stock Shareholders	$	8,285,285		$	(1,906,437	)	$	30,817,073		$	(7,348,851	)

Net Income/(Loss) per share
Basic	$	0.07		$	(0.04	)	$	0.28		$	(0.15	)
Diluted	$	0.07		$	(0.04	)	$	0.27		$	(0.15	)

Weighted average number of shares outstanding
Basic		114,757,014			47,790,105			111,289,024			47,023,094
Diluted		116,717,500			47,790,105			113,350,998			47,023,094

The accompanying notes are an integral part of these condensed consolidated financial statements.

AMMO, Inc.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Nine Months Ended December 31, 2021 and 2020

(Unaudited)


	Preferred Stock				Common Shares				Additional			Stock
	Number		Par Value		Number		Par Value		Paid-In Capital			Subscription Receivable			Accumulated (Deficit)			Total

Balance as of March 31, 2021		-	$	-		93,099,967	$	93,100	$	202,073,968		$	-		$	(41,819,539	)	$	160,347,529

Acquisition stock issuances		-		-		20,000,000		20,000		142,671,282			-			-			142,691,282
Common stock issued for cash
Common stock issued for cash,shares
Common stock issued for convertible notes
Common stock issued for convertible notes,shares
Stock subscription receivable for exercised warrants
Stock subscription receivable for exercised warrants, Shares
Common stock issued for debt conversion - related party
Common stock issued for debt conversion - related party, Shares
Common stock issuance costs
Issuance of warrants for convertible notes
Common stock issued for covertible notes
Common stock issued for covertible notes, Shares
Common stock issued for debt conversion
Common stock issued for debt conversion, Shares
Issurance of warrants for convertible notes
Common stock issued for exercised warrants		-		-		431,080		431		943,476			-			-			943,907
Common stock issued for cashless warrant exercise		-		-		276,907		277		(277	)		-			-			-
Common stock issued for services and equipment		-		-		772,450		773		1,630,928			-			-			1,631,701
Employee stock awards		-		-		856,000		856		2,897,394			-			-			2,898,250
Stock grants		-		-		-		-		197,110			-			-			197,110
Issuance of Series A Preferred Stock, net of issuance costs		1,400,000		1,400		-		-		31,007,396			-			-			31,008,796
Warrant issued for services										594,033			-			-			594,033
Preferred stock dividends declared		-		-		-		-		-			-			(1,758,405	)		(1,758,405	)
Dividends accumulated on preferred stock		-		-		-		-		-			-			(144,561	)		(144,561	)
Net income		-		-		-		-		-			-			32,720,039			32,720,039

Balance as of December 31, 2021		1,400,000	$	1,400		115,436,404	$	115,437	$	382,015,310		$	-		$	(11,002,466	)	$	371,129,681

Balance as of March 31, 2020		-	$	-		46,204,139	$	46,204	$	53,219,834		$	-		$	(34,007,245	)	$	19,258,793

Common stock issued for cash		-		-		11,536,143		11,537		23,601,082			-			-			23,612,619
Common stock issued for convertible notes		-		-		2,667,358		2,667		3,872,292			-			-			3,874,959
Common stock issued for exercised warrants		-		-		1,096,939		1,097		2,287,781			-			-			2,288,878
Stock subscription receivable for exercised warrants		-		-		309,775		310		664,665			(664,975	)		-			-
Common stock issued for debt conversion - related party		-		-		1,000,000		1,000		2,099,000			-			-			2,100,000
Common stock issued for cashless warrant exercise		-		-		160,274		160		(160	)		-			-			-
Common stock issuance costs		-		-		-		-		(3,344,436	)		-			-			(3,344,436	)
Common stock issued for services		-		-		58,336		58		87,442			-			-			87,500
Employee stock awards		-		-		465,081		465		716,124			-			-			716,589
Stock grants		-		-		-		-		213,130			-			-			213,130
Issuance of warrants for convertible notes		-		-		-		-

SEC Form 10-Q filed by AMMO Inc.